STATE TAX PLANNING FROM ONESOURCE
ONESOURCE State Analytics software provides real-time, multiyear, multistate tax planning, audit analysis, and tax forecasting. Feature-rich and offering unlimited "What if" analysis capabilities, ONESOURCE State Analytics enables state tax professionals to advance beyond traditional spreadsheet modeling and analysis to an automated method that is more efficient, accurate, and transparent.
Completely web-based and scalable to support complex corporate tax structures, ONESOURCE State Analytics provides a single, integrated view of state tax information, enabling you to quickly identify an optimized tax profile and effectively forecast and manage the tax impact of changes in business forecasts, business events, and regulatory environment.
ONESOURCE State Analytics empowers you to accurately assess the overall tax impact of changes in a company's:
- Legal entity structure
- Filing options
- Intercompany transactions
- Audit positions
- Unlimited multiyear, multijurisdiction "What if" modeling
- Centralized data repository with easy data ort from multiple systems
- Unparalleled flexibility and built-in intelligence
- Menu-driven optimizers
- Embedded, customizable tax rules
- Centralized record keeping
- Robust reporting with Microsoft Excel® integration and graphical organizational charts
ONESOURCE State Analytics software makes accurate and thorough legal entity modeling a reality. Smart modeling wizards and optimization technology provide a quick and accurate method to evaluate restructuring opportunities in the existing structure, or as the need arises, such as during an M&A transaction.
The software enables your tax department to quickly perform a thorough analysis of potential structures and determine if there's a reduction in your state income tax liability. In addition to calculating the potential benefits, it can automatically create organization charts reflecting the new legal entity's organizational structure, saving hours or days of valuable time.
With ONESOURCE State Analytics, you're equipped to model structural changes for:
Optimizing Entity Restructuring and Simplification Reduce compliance costs and audit
isk, while gaining greater predictability over a wider range of financial results. Using ONESOURCE State Analytics smart modeling wizards, tax professionals are able to model potential legal entity structures and accurately measure the effectiveness of each structure across a range of financial results.
ONESOURCE State Analytics can also evaluate thousands of potential entity structures. Users are able to identify legal entity structures that meet their dynamic business requirements and offer them the best possible tax position.
Optimizing Mergers and Acquisitions
ONESOURCE State Analytics adds the acquired company's legal entity structure to the existing structure. Users can compare the multiyear tax liability between the two structures across a range of financial forecasts. Alternate structures can be easily evaluated across multiple years using smart modeling wizards and optimizers - all in a fraction of the time it would take to analyze the initial tax liability models for a single year using a spreadsheet.
With ONESOURCE State Analytics, you are able to examine restructuring options when they have the most flexibility to make structure changes - at the time the merger or acquisition occurs.
Analyzing the Impact of a Divestiture
With ONESOURCE State Analytics, the impact of a divestiture can be assessed in a few simple steps and the results can be compared with those of the original structure. In addition, alternate structures can be easily created and analyzed using the ONESOURCE State Analytics smart modeling wizards and optimizers.
In ONESOURCE State Analytics, all filing options are parameter based. With a single change, you can quickly see the impact of every filing election. It takes care of the complicated multiyear calculation logic across a range of financial results. Because of the simplicity of scenario creation, each election can now be fully analyzed and understood, enabling companies to make the best choice to optimize their tax positions.
With ONESOURCE State Analytics, companies get a comprehensive picture of the effectiveness of each election, including:
Filing Separate or Combined
Some states provide companies with the option either to file separately or to be included in a combined return. ONESOURCE State Analytics users can model, analyze, and document the tax impact of either choice simply by creating a combined filing group and adding the appropriate members.
Worldwide or Water's-Edge Election
Some unitary states allow companies to exclude some foreign entities from the combined filing by electing Water's Edge. In some cases, this decision can be in effect for multiple years. With ONESOURCE State Analytics, users easily model the effect of this election by changing the filing option for their unitary state.
Check-the-Box for Flow-Through Entities
Some states dictate how a partnership must file, ignoring an entity's federal check-the-box election. Other states have different flow-through treatments for different types of partnerships or require allocation of partnership income rather than combined apportionment. Users of ONESOURCE State Analytics easily understand the impact of these rules by changing their check-the-box elections from year to year, and modeling any changes to the partnership treatment rules.
Foregoing Carryback of NOLs
Some states provide an election to forego NOL carryback, allowing an NOL to be carried forward without first attempting carryback. ONESOURCE State Analytics keeps track of which states allow this election, enabling a user to simply make the election for their entities and watch the ripple effects cascade across years in their multiyear scenario.
For industries with unique apportionment methods, we also offer robust "What if" apportionment modeling capabilities that make it possible to quickly determine the full tax impact of M&A activity, changes in the business forecast or legal entity structure, proposed legislation, and audit settlements.
Examples of ONESOURCE State Analytics specific industry measurements include:
- Revenue miles, revenue tons, takeoffs/landings, and tons handled for transportation
- Subscribers and audience size for broadcast
- Banking receipts and deposits for financial services
- Barrels and pipeline traffic units for energy
With ONESOURCE State Analytics, companies can now quickly and accurately pinpoint the best transaction pricing models. The ONESOURCE State Analytics transfer pricing functionality allows companies to easily determine whether changing the transfer price will increase or decrease their tax liability.
Hundreds of individual transactions can be simultaneously adjusted by changing a single field in the scenario. The calculation logic automatically and reliably accounts for the differences in taxable income and eliminations. Using ONESOURCE State Analytics, you can accurately forecast the tax liability of:
ONESOURCE State Analytics provides customers with fast and accurate modeling of intercompany transactions, supply-chain transactions, and derived value transactions (such as a royalty transaction derived from an entity's revenue). In addition, it automatically accounts for expense disallowance (anti-PIC legislation) and group eliminations. ONESOURCE State Analytics customers can quickly model CUP, Cost +, Resale -, and CPM intercompany transactions, and can analyze the effect across a range of financial forecasts.
ONESOURCE State Analytics enables customers to quickly measure the impact of various rates and to leverage technology to find the optimal transfer price across thousands of individual transactions.
ONESOURCE State Analytics enables users to fully understand the impact of audit concessions. ONESOURCE State Analytics multiyear calculation logic allows tax professionals to simply add an audit adjustment in a given year and instantaneously flow the result across every subsequent year and every state in the scenario.
NOL and credit carryforwards are automatically recalculated, giving a true picture of the overall impact of each possible audit adjustment. With this capability, companies are better prepared to negotiate settlements and defend their tax strategies.
Using ONESOURCE State Analytics, you can accurately model audit examinations and settlements, such as:
Federal Revenue Agents Report (RAR) Adjustments
Changes to federal income caused by Federal RAR adjustments will roll down to the state level and impact the state returns. These changes can impact NOLs as well as credit utilization across multiple years. ONESOURCE State Analytics automatically recalculates the impact of these adjustments on the state level, including changes to NOL and credit generation, utilization, and expiration as a result of the Federal RAR.
State Requires Combined Filing
When a company has multiple subsidiaries in a unitary state but is filing on a separate return basis for at least one subsidiary, some states have successfully argued that a unitary relationship exists. Therefore, the unitary return should include the excluded subsidiary. This situation may also occur when a combined filing is permitted but the companies are filing on a separate-company basis. Leveraging ONESOURCE State Analytics, customers can quickly and easily analyze the impact of filing on a combined or unitary basis.
State Claims Nexus
In the last few years, states have successfully argued for broader nexus standards. As a result, more companies are forced to file in states where they had previously claimed a lack of nexus with the foreign jurisdiction. With ONESOURCE State Analytics you can measure the impact of nexus in different jurisdictions in a matter of minutes, allowing you to quickly model the impact of nexus changes on your overall tax liability and on your destination/throwback sales.
State Disallows Intercompany Transactions for Intangibles
The Anti-Passive Investment Company (PIC) expense disallowance for intercompany royalty and interest transactions requires that companies be able to model these disallowance rules. With ONESOURCE State Analytics, you can modify the state disallowance rules for your intercompany transactions to model the expense disallowance.
ONESOURCE State Analytics enables tax departments to efficiently and accurately model new legislation with a simple, parameter-based approach that automatically handles the complicated business logic for calculations such as NOL carry-forwards, check-the-box treatments, and sales throwback. By using ONESOURCE State Analytics, you will spend less time building and maintaining spreadsheets and more time evaluating and analyzing results.
Leveraging ONESOURCE State Analytics, corporations can fully understand the multiyear impact of legislative changes such as:
State Changes to Net Operating Loss (NOL) Deduction Rules
Some states have changed their NOL deduction rules to either put a moratorium on utilization in place or otherwise limit the utilization of NOLs. With ONESOURCE State Analytics, you can change the NOL generation and utilization rules to reflect proposed NOL changes and analyze the effect on your state tax liability.
State Changes to Apportionment Formulae and Factor Calculations
In the current fiscal climate, many states have made changes to the apportionment factor or apportionment rules. ONESOURCE State Analytics tax rules are fully customizable, enabling you to model changes to factor weights and throwback rules, and to define the apportionment accounts included in the factor calculations.
ONESOURCE State Analytics also offers robust "What if" apportionment modeling capabilities for industries with unique fourth-factor apportionment methods. Examples of specific industry measurements include:
- Revenue miles, revenue tons, takeoffs/landings, and tons handled for transportation
- Subscribers and audience size for broadcast
- Banking receipts and deposits for financial services
- Barrels and pipeline traffic units for energy
State Disallowance of Intercompany Transactions for Intangibles
The Anti-Passive Investment Company (PIC) expense disallowance for intercompany royalty and interest transactions requires that companies be able to model these disallowance rules. ONESOURCE State Analytics allows you to modify the state disallowance rules for intercompany transactions to model the expense disallowance.
State Changes to Flow-Through Entity Treatment
States have different treatments for partnerships based on the type of partnership, the type of partner, and whether the partner and partnership are unitary. With ONESOURCE State Analytics, you can easily change the partnership rules to analyze the impact on your state tax liability when the state proposes a change to check-the-box treatment or to how income is treated (allocated or apportioned) in specific situations.
States Decoupling from Federal Bonus Depreciation
Many states have decoupled from the Federal Bonus Depreciation that began as part of the Job Creation and Worker Assistance Act of 2002 (JCWAA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). A few states have unique add-back and recapture rules for the federal bonus depreciation. ONESOURCE State Analytics users can analyze the yearly impact of the various state rules on their multi-year scenario and get a clear picture of how timing differences caused by varying state rules will affect their state tax liability on a multiyear basis.
BUILD MULTIPLE SCENARIOS IN A SNAP
With ONESOURCE State Analytics software, corporate tax departments can achieve a multiyear (including future years) view of their state income tax position. It enables the integration of critical income tax information into a central repository for in-depth analysis across multiple years.
ONESOURCE State Analytics' rich reporting capabilities provide insight at every level, from account-level data to high-level summary comparisons. State tax professionals can quickly document and support their "What if" analyses with quantifiable results.
Optimize Your Tax Profile
ONESOURCE State Analytics software provides all the built-in tax intelligence, calculations, and tax rule information required to determine the multiyear tax impact of various tax positions, audit settlements, or changes in the business and regulatory environment.
Leveraging menu-driven wizards and embedded modeling tools, you can quickly and easily perform complex multistate, multiyear modeling and analysis of:
- Entity structure - Model structure changes and evaluate an unlimited number of merge and split combinations.
- Nexus - Assess the tax impact of nexus changes, automatically accounting for the effect on destination/throwback sales, including Joyce/Finnigan in unitary states.
- Flow-through entities - Analyze the state-by-state impact of changes to an entity's check-the-box election.
- Unitary, combined, and consolidated - Measure the impact of filing unitary, combined, or consolidated in multiple states.
- Apportionment - Modify tax rules to model the impact of changes in apportionment factor legislation or negotiated positions, including fourth-factor apportionment metrics for industries with unique apportionment methods.
- Divisions spanning functions, products, and geographies - Track and manipulate data at the division level, while rolling up and calculating liability at the legal entity or group level.
- Intercompany transactions and transfer pricing - Optimize transfer prices while automatically accounting for intercompany eliminations.
- Multiyear NOL and credits - Track and automatically apply NOLs and credits duringWhat if" modeling to achieve an accurate multiyear view.
- Operations placement - Identify the optimal domicile and legal entity structure for a new operation.
You can also perform ad hoc, iterative "What if" analysis by modifying existing scenarios or taking advantage of optimization engines.
ONESOURCE State Analytics evaluates thousands of possible combinations to identify an optimal entity structure, transfer pricing model, or apportionment method. It saves time, increases accuracy, and increases self-sufficiency and certainty.
Set Parameters to Meet Your Specific Needs
ONESOURCE State Analytics software makes it easy to modify the embedded tax rules or create user-defined rules to apply negotiated tax positions or model pending legislation. You can easily model scenarios based on:
- Rules, such as modeling apportionment factors to match your negotiated positions.
- Groups, such as accurately modeling unitary, combined, and consolidated filing groups.
- Partnerships, such as varying rules on how income is flowed and taxed, ownership structure, and special allocation.
CENTRALIZED AND COMPREHENSIVE DATA STORAGE
ONESOURCE State Analytics includes a comprehensive data repository that enables corporate tax departments to collect, standardize, and centralize critical data associated with state and local taxation. By integrating relevant data, it eliminates issues commonly associated with independent data silos, disparate tax systems, and individual spreadsheets.
With ONESOURCE State Analytics, you have rapid access to data, advanced tax calculations, and enhanced record keeping to comply with Sarbanes-Oxley documentation requirements.
The ONESOURCE State Analytics data repository is legal entity-centric and completely configurable. In addition, it supports the consolidation of data over an unlimited number of years (past, current, and future) and includes reporting tools to maintain, update, manage, and analyze the data on a continuous basis.
The flexibility of the system enables you to easily import data from an unlimited number of sources, including compliance systems, financial applications, and Excel spreadsheets.
The data repository includes:
- Multiyear legal entity structure
- Multiyear entity- or division-level income and apportionment factor information
- Multiyear group membership and filing elections
- Group and entity-level eliminations
- Tax rules for domestic taxing jurisdictions
- Flow-through rules
- NOLs and credits
- Apportionment methods and detailed sub-accounts
- Intercompany transactions and transfer prices
- Intercompany transaction expense disallowance
EFFICIENTLY EVALUATE THOUSANDS OF OPTIONS
Thomson Reuters unparalleled optimization technology merges tax intelligence with advanced mathematics, enabling tax professionals to do what was previously impossible: efficiently evaluate thousands of possible combinations with unprecedented thoroughness and accuracy. Combining sophisticated mathematical and economic algorithms with tax rules and corporate data from the repository, the optimizers quickly calculate the tax impact of the potential alternatives and present back to the user the best options.
Offering a wizard-driven interface, the state tax optimizers are easy to use and enable you to apply constraints reflecting current business facts to ensure that the optimizers identify only the options that can be implemented. With this level of insight and control, it is finally possible to identify a tax profile that minimizes tax impact and adheres to business constraints to reduce tax risk.
ONESOURCE State Analytics includes the following breakthrough optimizers:
- Entity Structure Optimizers - Evaluate merging or splitting legal entities to minimize the corporation's overall tax liability
- Apportionment Method Optimizer - Considers the rules governing apportionment to determine the best method of apportionment
- Transfer Pricing Optimizer - Identifies the set of transfer prices that minimizes tax liability
- Operations Placement Optimizer - Determines, from a tax perspective, the best location and legal entity structure for a new operation, such as a factory, a distribution center, or a warehouse
TAX RULES DATABASE
Through its multistate tax rules database, ONESOURCE State Analytics delivers unprecedented tax modeling opportunities as they apply to large, complex, multijurisdictional organizations. The Tax Rules Database manages tax code complexity while simultaneously providing the flexibility to model numerous tax positions and policies.
The Tax Rules Database contains multi-jurisdiction, multi-industry, and multiyear state tax regulations and tax codes for more than 56 state and municipal jurisdictions. Presented through our unique "parameter-based" approach, the flexibility of our system enables you to apply specific tax rules where and when they are applicable.
ONESOURCE State Analytics also offers the ability to set user-defined tax rules that can be used to model pending legislation or set negotiated tax terms and apply rules to individual entities in user-specified jurisdictions. The Tax Rules Database enables planners to:
- Analyze the impact of pending legislation
- Analyze negotiated tax positions
- Analyze company-specific tax positions
- Contemplate future structure changes in light of changed regulations or filing positions
- Model multiple interpretations of tax code and apply various interpretations by entity or industry
- Analyze consistency of positions across entities, jurisdictions, or years
- Model custom jurisdictions and tax rules
- Define industry specific apportionment methods and the allowed method in each relevant jurisdiction
- Analyze the impact of adding business in other jurisdictions
DETAILED, YET SIMPLE REPORTING
ONESOURCE State Analytics from Thomson Reuters includes rich visualization and reporting capabilities to provide users with immediate access to vital tax information. ONESOURCE State Analytics reports are easy to access and run, and enable you to create detailed, comprehensive views that accurately reflect your current and future tax positions, and provide critical Sarbanes-Oxley documentation.
In addition, ONESOURCE State Analytics reports are fully integrated with Microsoft Excel, so the final report format is familiar and easy to use. All report formats provide presentation-ready output in familiar multitab Microsoft Excel modeling formats. The robust reporting and visualization capabilities include:
To support legal entity modeling and analysis, ONESOURCE State Analytics automatically generates graphical organization charts (Visio format), providing you with an easy-to-read, graphical view of all partnership divisions and legal entities.
Standard reports include typical planning, analysis, and management reports within or across scenarios. Leveraging the library of standard reports, you have the ability to:
- Compare apportionment factors and tax liability across scenarios
- Compare tax liability by entity, group, or jurisdiction
Structure reports provide visibility into parameters that drive reports and drive calculations. Structure reports include the ability to run:
- Legal entity structure reports and apportionment summary reports
- State-by-state federal, state, and apportionment numbers for entities
- Entity-by-entity nexus reports for groups and separate jurisdictions
- Tax rule detail reports
Custom reports provide the flexibility to build reports according to specific criteria. These reports can be easily saved as templates for future use. Custom reports include the ability to:
- Leverage Microsoft pivot tables to compare across scenarios, years, entities, jurisdictions, and accounts
- Compare federal information by legal entity and across multiple scenarios
- Create dynamic, customized report templates based on your specific reporting needs
Within each scenario you can create reports specific to that scenario. You can expose the entire multiyear data structure as well as support multiyear legislative modeling. Information can be viewed either within the scenario itself or exported to a Microsoft Excel modeling format. Reports generated through Analysis Views include the ability to:
- Compare legal entities over multiple years
- Compare unitary and consolidated groups over multiple years
- View comprehensive state-by-state apportionment data for legal entities and groups
- View group membership inclusion by entity